Attention has shifted to developing the non-oil sector in the face of dwindling oil revenue. Some big players in agriculture, solid minerals and cement, among others, have taken up the challenge. Assistant Editor OKWY IROEGBU-CHIKEZIE writes on how their exploits are boosting the economies of states where they operate.
Former Lagos Chamber of Commerce and Industry (LCCI) president Mr. Remi Bello is one of the leading advocates of economic diversification. He has been calling on the Federal Government to diversify the economy by paying attention to the non-oil sector. He believes that agriculture, solid minerals and manufacturing, have a lot of prospects. To him, diversifying the economy will correct its age-long dependence on oil, in addition to ensuring that Nigeria earns more.
The former LCCI chief noted that the challenges facing Nigeria because of the fall in oil prices have made the need to look inward imperative. He regretted that because Nigeria had, over the years, relied almost on oil to fund its economy, most states are having challenges meeting their basic financial obligations. He was, therefore, emphatic that if the economy must survive and industrialise, there is an urgent need to diversify sources of income and encourage local entrepreneurs.
Minister of Solid Minerals Development Dr. Kayode Fayemi could not agree less on the need to encourage local entrepreneurs to harness the immense potential in the non-oil sector.
At the groundbreaking of Dangote Cement plant in Okpella, Edo State, Fayemi said the greatest desire of the government was to see Nigerian entrepreneurs working with it through the Backward Integration Policy (BIP) to unlock the potential of the solid minerals sector.
According to the minister, a recent report his ministry inaugurated revealed that Nigeria’s mineral resources can be used to drive the country’s industrialisation. The report added that whereas the sector contributed just 0.34 per cent to the Gross Domestic Product (GDP), with more investment in the sector, the government would stand to earn $25 billion annually by 2025. He said plans had reached an advanced stage to encourage states to tap their mineral resources, insisting that the country can only grow as more local players come on stage.
Interestingly, some discerning local investors have seen the bountiful opportunity which the Federal Government’s BIP has thrown up and are willing to invest in the states where the mineral resources are domiciled. Already, states, such as Lagos, Ogun, Edo and some states in the North are benefitting from huge investments by some indigenous players and multinationals. This has given more impetus to the BIP, which ultimately seeks to pull Nigeria out of its perpetual dependence on imports, particularly, since that crude oil prices have been crashing since mid June 2014.
For instance, in Edo, where the President of Dangote Group, Aliko Dangote, is producing cement locally by using the abundant raw materials in the area, the Governor Adams Oshiomhole and the indigenes have been jubilating.
The governor personified that joyous mood when he said: “By investing $1 billion in a cement plant in Okpella community, Dangote has established a factory that will feed thousands of mouths directly every day, while 100,000 people will benefit from education and health facilities that will come from the investment.”
The six million metric tons Dangote Cement’s new plant in Okpella expected to employ thousands of youths, directly and indirectly in the next 18 months. This was why Oshiomole lauded Dangote’s aggressive investment drive, noting that without his (Dangote’s) resolve to build industries and employ Nigerians, so many youths would have been jobless.
While saying that Nigerians will be forever grateful to the industrialist for helping to reduce unemployment in the country, the governor said: “Dangote is a special breed. He is an enigma that has done so much for the youths of this country. He should be lauded for doing so much to develop our youths and put food on the table of thousands of Nigerians. For us in Edo state, we are grateful and will continue to be grateful for this huge investment.”
Apparently endorsing the decision of local entrepreneurs in the mould of Dangote to help drive the non-oil sector, Oshiomhole said the practice where manufacturers obtained land from government only to use the land as a base for importation was the most destructive practice for an economy.
His words: “Dangote has set an example by manufacturing locally, using Nigeria’s abundant natural resources. It is a wicked practice for investors to get government land and use it as a base for importation. If Nigerian investors invest in the economy, the economy will grow from strength to strength and young men will have jobs.’’
The Okuokpellagbe of Okpella Kingdom, Dr. Andrew Dirisu, also echoed the hopes of residents of the community that the investment will create jobs and pther positive spin-offs. While lauding the doggedness of Dangote Cement and its prompt response to the call for the establishment of the cement plant, he commended the State Governor for his support in acceding to the desire of the people to have Dangote Cement in the community, since the raw material is available there.
The paramount ruler, who promised that the community will provide the necessary enabling environment for the plant to operate and generate economic activities, also
urged the company’s management to ensure that the various Corporate Social Responsibility (CSR) projects that the indigenous conglomerate is known to have provided for its other host communities in various sectors are replicated in Okpella to the delight of his people.
The expectant mood of the people is not lost on Dangote, which was why he noted that the new cement plant could transform the economy of Okpella and Edo State. He said investment in local cement plants saved Nigeria $3 billion spent on importing cement. While promising to always invest in Nigeria, as the country remains the best place to invest in the world, he urged other private sector investors to invest in critical areas of the economy. He said the government has expressed readiness to resuscitate the industrial sector.
The Executive Secretary, Nigeria Sugar Development Council (NSDC) Dr. Lateef Busari, said the upward swing in the size of injected investment by operating companies in sugar manufacturing expresses possibility in achieving self sustainability. He said the outlook for local sugar production is optimistic with the rekindled commitment of sugar companies to exploring backward integration in achieving self sufficiency.
Busari, who spoke with The Nation in an exclusive interview, said the refineries, particularly, Dangote Sugar Refinery, has expanded and refurbished its factory operations site at Savannah Sugar Company (SSC) in Numan, Adamawa State with about 6,000 hectares (ha) of sugarcane plantation.
He noted that Savannah, the most efficient of all plants has also acquired a new 12,000TCD mill and expanded the estate to include adjoining Guyuk with size of about 7,500 hectares recently granted by the State. Also, the firm has acquired land in six other states including Lau/Tau, Taraba State; Kebbi State; Kaugama, Jigawa State; Mambe, Niger State; Kpata, Kwara State and Kogi State for sugar projects.
Erisco Foods Limited
also investing
Dangote Group is not the only indigenous operator that has thrown its hat in the non-oil ring. In tomato puree manufacturing, for instance, an indigenous firm Erisco Foods Limited has taken the gauntlet by investing over N300 million into the production of tomato paste. The tomato paste company, said to be the largest in Africa and the fourth largest in the world, is billed to create thousands of jobs.
The company’s Chief Executive Officer, Chief Eric Umeofia, however, urged the Federal Government to sustain the formulation of positive policies that would enhance production capacity of manufacturers, stressing that the issue of multiple taxation should be addressed. He stated that the foreign exchange restriction of 41 items by the Central Bank of Nigeria (CBN) has saved the country a huge forex and compelled Nigerians to patronise home-grown foods.
Umeofia said for the company to fast track its backward integration programme, it has developed a technology that synchronizes its existing machines to produce tomato paste directly from fresh tomatoes to tomato pastes and ketchups. He stated: “The Erisco Foods revolution in tomato paste production will stop the annual wastage of over 75 per cent of fresh tomatoes across Nigeria. If we continue with the good policies of the present administration, there will be nothing like a tomato glut anywhere in Nigeria in the next two years.”
The CEO explained that as off-takers, the company will produce and process to meet its local demands and export to earn foreign exchange provided government continues to support manufacturing. “Our backward integration programmes planned for Jigawa, Sokoto and Katsina will generate employment and prosperity for 50, 000 Nigerians within three years,” Umeofia said, adding that the company has an installed production capacity of 450,000 metric tonnes per annum in its Lagos factory alone, making it the biggest in Africa and 4th Largest in the World.
He urged the government to direct heads of government agencies involved in industrial sector to prioritise local manufacturers over their foreign counterparts. He pleaded with government to stop giving undue advantage to what he called ‘briefcase’ foreign investors who camouflage as industrialists but whose primary interest is to import finished goods as raw materials without paying taxes or the relevant customs duties.
Agric also on local
investors’ radar
Apart from manufacturing, the Dangote Group is also investing heavily in agriculture for massive employment generation. For instance, the group recently commenced multi-billion dollar rice projects in some states in the North, aside flagging off a rice out-grower scheme, with the distribution of rice seedlings to farmers in Jigawa State. The plan, according to Dangote, is to reduce Nigeria’s dependence on imported rice, create massive jobs for the people and provide good returns to the famers.
He explained further: “We envisage producing up to one million tons of white rice with the cultivation of 200, 000 hectares of land. This will lead to a conservation of about $11 billion presently spent on importation of food items that could otherwise be produced locally. It is gratifying to know that the Federal Government has recently announced that it is putting in place strategies that will make farmers have greater access to implements and other inputs.”
Local manufacturers in the flour milling sector are also not left out in the backward integration programme. For instance, Flour Mills of Nigeria Plc (FMN) has invested in Thai Farms and other agricultural projects to cultivate raw materials for most of its processes.
Although there are still challenges with meeting factorydemand, thereby necessitating importation, the company has been able to reduce importation of raw materials by over 50 per cent, according to the Group Managing Director, FMN, Mr. Paul Gbededo.
Government
reaffirms support
The Minister of Industry, Trade and Investment, Dr.Okechukwu Enelamah, said his ministry is ready to play a critical role in the nation’s economy, especially now that the government is poised towards the diversification of the economy away from oil in a sustainable manner.
He said he plans to achieve this through creating an enabling environment for industry, trade and investment through the implementation of the Nigeria Industrial Revolution Plan (NIRP), championing the cause of the Micro Small and Medium Enterprises (MSMEs) as a means of creating jobs and achieving inclusive growth.
Enalamah also said despite the challenges the nation is facing, the present administration is poised to attract long-term local and foreign investments.
In his words: “The flip side of the crisis is the opportunity it presents; to create something new; to develop new attitudes and appetites.
“Fully convinced that the crisis is too good an opportunity to waste, the administration of President Muhammadu Buhari has started the difficult but rewarding task of breaking free from our traditional dependence on oil and gas and in its place developing a diversified export base and a solid base of domestic manufacturing.”
Enalamah hailed indigenous entrepreneurs and promised that government will do all things possible to create an enabling environment for them to thrive.
Secretary to the Government of the Federation, Mr. Babachir Lawal, also said the government would continue to support the growth of indigenous businesses, especially in this period of economic downturn.
He said the current economic reality calls for a decisive policy thrust to address issues which must be pragmatic enough to leverage on.
